Micro-finance has become the darling of developmental economics—and many charities—over the past few years. But greater awareness doesn’t always translate into greater effectiveness. As reported in today’s New York Times, for nations with a dearth of traditional lenders new operators have begun to step into the fray, offering micro loans with what turns out to be exorbitant interest rates. Mexico seems to be ground zero for micro-finance sharks.
One outfit called Te Creemos offers annualized interest rates of 125%. (Please note: I have hyperlinked to their site in case you find occasion to write a letter to these Shuteeds–for clarification on this term see the chapter on names in Freakonomics–to let them know how much their services are appreciated). For Mexico as a whole the average interest rate provided by micro-lenders is around 70%! By comparison, the global average, according to most analysts, is around 37%.
Muhammad Yunus popularized micro-finance in the 1970’s to aid basket weavers in Bangladesh. Is he destined to see his brainchild sour like Michael Milken?
A few months ago, I wrote about the early stages of the conflict in Ukraine through the lens of Sun Tzu’s The Art of War. While it appears likely that the war will carry on into the foreseeable future, enough time has passed for us to make an honest assessment of each side’s relative […]
The Ukrainian Army has made dramatic strides in the last few weeks. Ukraine’s tactical commanders have outfoxed their Russian counterparts, and by issuing a feint towards the south the UA has been able to earn substantial gains in the north of their country. The impact of these efforts have been compounded by the steady stream […]
In mid-May the Irish political party, Sinn Féin, won the plurality of seats in the Northern Ireland Assembly. Many American readers might not fully understand the significance of Sinn Féin’s political victory- but rest assured that subjects of the United Kingdom and a wide range of political movements the world over have heard the message […]
The first wave of the Russian offensive in Ukraine has fallen short of Russian autocrat Vladmir Putin’s ambitions. Most analysts deduced that Putin had hoped to achieve a decapitation strike of the Ukrainian government- taking Kiev and replacing Ukrainian President Vladimir Zolinski with a pro-Kremlin voice. Kiev has been threatened repeatedly through the course of […]
On the weekend of March 26th, the notorious MS-13 gang went on a massive killing spree in El Salvador which left more than 70 people dead by Sunday. Even for a country where powerful gangs hold massive sway, this recent tragedy stands out considering that it was the bloodiest day on record since the civil […]
